Dr. Karina Doorley:

I think budget 2022 was a really good example of a budget that assisted low-income families and high-income families, but not so much the middle-income families. That was really down to the fact that there was some indexation of the tax benefit system. Many benefits were increased by close to inflation or perhaps a little bit more than inflation. A few were not. The income tax system was indexed by more than forecast inflation, so that gave a kind of a boost to higher-income families. In the middle, there was only a small change to PRSI rates. That effectively became a tax increase for middle-income families who were not benefiting from the change to income tax. There was also a lower than forecast inflation increase in the working families payment and a freeze to child benefit. The cumulation of those things around the middle of the income distribution, together with changes to indirect taxation, meant that the middle of the income distribution did not see the same benefit from budget 2022 as the lower income households, who benefited from targeted changes to welfare payments, and the higher income families, who benefited from tax cuts.

I suppose what was missing from budget 2022, if the objective was a unified enough indexation, was changes to PRSI rates, USC rates, increasing them in line with inflation as well as just income tax.